Össur: FY’22 guidance reiterated - ABG

Despite Q1’22 being slightly weaker than consensus...
…we see limited downside to FY’22 consensus
Reiterate fair value range of DKK 32-60

Strong growth in EMEA, while APAC sees COVID headwinds
Össur’s Q1’22 was slightly below company-collected consensus. Organic growth was 6% (cons. 8%) with an EBITDA margin of 16% (cons. 18%). The sales growth was driven fairly equally by both segments, while the EMEA region reported strong growth of 10%, Americas more neutral at 4% and the APAC region negative growth of 6%, primarily due to COVID in China (~3% of group sales in FY’21), which we estimate resulted in ~USD 1m in lost sales in Q1’22. We expect to see an additional USD 1.5m in lost sales in Q2’22 from COVID in China.

Current price increases not enough to offset higher costs
The company has implemented ~2.5% price increase on a group level (more in emerging markets, less in heavily regulated markets, such as the Scandinavian countries). However, we do not think this will be sufficient to shield the bottom line from increased supply chain and input costs given today’s high inflation. The company is looking at more price increases in H2’22. However, as consensus pre-Q1’22 was bearish on FY’22, we see little risk of material FY’22 estimate revisions given that the company reiterated its FY’22 guidance. The guidance now stands at organic revenue growth of 6-9% (ABGSCe 7%, cons. 7.3%) and an EBITDA margin of 20-21% (ABGSCe 20.1%, cons. 20.3%). This also means that FY’22 will be more back-end-loaded than usual (despite Q1 being seasonally weaker).

Long-term fundamentals remain intact
We update our estimates slightly to reflect the Q1’22 report and comments from management. We reiterate our scenario-based fair value range of DKK 32-60, highlighting that the underlying market fundamentals remain solid. We furthermore note that the executive team will be reorganized within ~1 quarter, with changes to the CEO (now Sveinn, the former CFO), CFO (expected to be announced within the ...
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